Tony Kurdzuk/The Star-LedgerGov. Chris Christie speaks at the Statehouse this afternoon where he proposed suspending an automatic payroll increase of as much as $683 per employee which would be used to fund the Unemployment Insurance Trust Fund.TRENTON -- Looking to blunt a steep business tax increase, Republican Gov. Chris Christie today proposed reducing some unemployment benefits.

Employers were set to see an increase in their unemployment tax starting July 1 because the state's unemployment fund ran out of money and has been borrowing from the federal government.

Last month, Christie said he would let the full tax kick in, but today he said he was looking to lessen the tax burden to businesses by reducing unemployment benefits.

Under Christie's proposal, the state would reduce the maximum weekly benefit for newly unemployed residents from $600 to $550. The governor also wants to require a one-week waiting period before benefits can be received and would require employees fired for "misconduct" to find other work for a prescribed period before becoming qualified again for unemployment benefits.

The governor's proposal needs the approval of the Democratically controlled Legislature, which he didn't have today.

Assembly Speaker Sheila Oliver said she would support some element of Christie's plan but was concerned about unemployed residents sharing the burden of the state's money problems. Later, she issued a joint statement with Assembly Majority Leader Joe Cryan calling the plan "ill-advised," and "insensitive and unsound."

Senate President Stephen M. Sweeney went further, calling the proposal a "total nonstarter." He said he would not consider any legislation to decrease benefits to the unemployed.

"The dead of winter is no time to leave New Jersey's unemployed out in the cold," Sweeney said.

On average, employers would have seen an increase of about $400, or more than 50 percent, per employee.

The governor's proposed changes would have only given them an increase of about $130 per employee, or a 17 percent hike, this year and would allow companies to prepare for future increases in advance.

Christie's proposal would enable the state to stop borrowing from the federal government in 2013, two years earlier than planned.

Christie rigorously defended the plan today, noting that New Jersey currently has the second-highest benefit payouts in the country and that 40 other states also require a one-week waiting period before paying unemployment benefits. His plan would bump New Jersey down to the third most generous payouts.

Democrats note that the proposal would benefit employers who laid off workers so that they could avoid paying an increased unemployment tax. Christie said that he was afraid employers would continue to lay people off if he didn't mitigate the tax increase.

The business tax increase is triggered by a growing shortfall in the state's Unemployment Insurance Fund. Business taxes are increased by law when the fund's balance dips below a certain level as measured every March. Christie has said the fund will be more than $1 billion in debt by March.

Unemployment in New Jersey climbed to a 33-year high of 10.1 percent in December — the first time since October 2006 that the Garden State's jobless rate eclipsed the national average of 10 percent.

Total employment in New Jersey fell to just over 3.91 million in December, with losses in both the public and private sectors.

According to the governor's office, more than $4.6 billion was raided from the fund from 1992 to 2006 to pay for other state programs. Growing joblessness as a result of the recession also put a massive strain on it.

"This is the wrong time, under the wrong economic conditions, to impose such an onerous and undeserved tax hike on New Jersey businesses," Christie said. "If we want to grow payrolls and improve our economy, we cannot ask businesses to shoulder the full brunt of the irresponsible budgeting policies that bankrupted the unemployment compensation fund in the first place."

Other states are in similar positions. According to the U.S. Department of Labor, 27 owe the federal government money for the unemployment benefits; California is the highest at $6.7 billion, and New York and Pennsylvania have each borrowed more than $2 billion.

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